Violence surged in Nagorno-Karabakh, leading to civilian and military casualties. Each side blamed the other for starting the violence. Azerbaijan announced a ‘unilateral ceasefire’ whereas Armenia-backed Karabakh forces accused Azerbaijan of continuing to fire shells. However, later on the Azeri Defence Minister said that its army would prepare to attack the capital of the Nagorno-Karabakh region if the separatists continued to open fire on civilians.
Impact on country risk
The Nagorno-Karabakh dispute between Azerbaijan and Armenia dates back to 1991 when the region located inside Azerbaijan and dominated by Armenians declared its independence from Azerbaijan. It was followed by an armed conflict between Armenia and Azerbaijan which was ended by a UN ceasefire agreement in 1994. Since then, negotiations with Armenia on the status of the Armenia-supported breakaway republic of Nagorno-Karabakh have been in a deadlock. Sporadic low-level violence was observed over the past years. However, the recent violence has been the worst since the 1994 UN ceasefire agreement. Despite the international community’s call for an immediate ceasefire, the risk of an armed conflict between Azerbaijan and Armenia remains given the sharp increase in military capabilities of Azerbaijan – an ally of Turkey – over the past years and Russia’s military presence in Armenia. In the past, the international community’s attempts to resolve the conflict have failed. Now, the mistrust between the West (including Turkey) and Russia makes the resolution of the conflict even more difficult. What is more, as Azerbaijan has been hit hard by the sharp drop in oil prices, the authorities could use the conflict with Armenia to distract the population from economic woes. The risk of a full-blown conflict in Nagorno-Karabakh is on the rise. Such conflict could have negative spillover effects in the South Caucasus region. Analyst: Pascaline della Faille, firstname.lastname@example.org